Lower capex outlay to shrink Hochschild’s FY2015 output

28th November 2014 By: Natalie Greve - Creamer Media Contributing Editor Online

Lower capex outlay to shrink Hochschild’s FY2015 output

Photo by: Bloomberg

JOHANNESBURG (miningweekly.com) – As part of its ongoing cash flow optimisation programme, Hochschild Mining has targeted further cost efficiencies to reduce operating expenditure and ensure that the company’s mines can deliver profitable ounces in 2015.

The group outlined on Friday that it had “optimised” the mine plans of the Arcata and Pallancata operations, in Peru, narrowing operational focus on accessible ore areas requiring reduced capital expenditure (capex) and with cutoff grades reflecting the current weaker metals price environment.

Plant throughput was expected to be reduced to 1 500 t/d at Arcata and 1 800 t/d at Pallancata, while the San Jose operation, in Argentina, would continue at its current level.

The resulting production target for 2015 from the three operations, as well as the Inmaculada project, which was expected to deliver between six-million and seven-million equivalent ounces of silver, was 24-million ounces of silver.

The emphasis on profitable ounces at all operations with reduced levels of sustainable capex in 2015 was expected to have a positive effect on the company’s overall costs, with the all-in sustaining cost for the company now expected to be reduced to between $15/oz and $16/oz in 2015.

Sustaining capex for current operations was budgeted at around $45-million, in part reflecting a significant temporary cut in development capex.

“In the current weak precious metals environment, Hochschild has reacted decisively to preserve capital and optimise cash flow by maintaining our focus on the production of profitable ounces as part of our successful ongoing cost reduction programme.

“Understandably, this has entailed a review of mine plans across the company, which will consequently reduce production but also reduce overall costs and capex in 2015, allowing us to produce profitable ounces at all our operations,” commented CEO Ignacio Bustamante.